Post-closing trial balance

Definition

The post-closing trial balance is a listing of all permanent accounts and their balances after closing entries have been journalized and posted. It ensures that debits equal credits after the closing process.

5 Must Know Facts For Your Next Test

1. The post-closing trial balance includes only balance sheet accounts, as all temporary accounts have been closed.
2. It serves to verify that total debits equal total credits after the closing entries.
3. This trial balance is prepared at the end of an accounting period after all closing entries are made.
4. The main purpose is to ensure that the ledger is in balance and ready for the next accounting period.
5. If there are discrepancies in the post-closing trial balance, it may indicate errors in the closing process or recording transactions.

Review Questions

Related terms

Adjusted Trial Balance:

A list of all accounts and their balances after adjustments have been made but before closing entries.

Closing Entries:

Journal entries used to transfer balances from temporary accounts to permanent accounts at the end of an accounting period.

Temporary Accounts:

Accounts that track financial results for a limited period, such as revenues, expenses, and dividends, which are closed at the end of each accounting period.